On 12 March 2026, the Central Bank of Ireland (Central Bank) published its first Insurance Quarterly newsletter (Newsletter) of the year. The Newsletter contains several supervisory updates of interest to Irish (re)insurers.

In this article, we outline key supervisory expectations and findings concerning the following Newsletter topics:

• the Central Bank’s feedback on its recent survey on the use of artificial intelligence (AI);
• a thematic review on climate risk integration; and
• updates on the implementation of the Solvency II review and the Insurance Recovery and Resolution Directive (IRRD).

Survey on the use of AI by Insurers

The Central Bank recently conducted a survey on insurers’ use of AI (in particular, generative AI) (Survey). The Central Bank combined the Survey with an information request from EIOPA on the generative AI exercise. The aim of the Survey was to enable the Central Bank to ensure that the regulatory and supervisory framework takes account of the opportunities and risks of AI use.

The key findings of the Survey are as follows:

• Circa 85% of firms surveyed use AI to some degree. The Central Bank found that most usage was not autonomous.
• Use of AI in the insurance value chain is expected to increase as automation advances.
• Firms are encountering several challenges in implementing AI, including a shortage of skilled people in the market, costs, and ambiguity around potential use cases.
• Purchasing “off-shelf” solutions from third-party providers is a popular strategy for sourcing AI systems.
• Firms are taking action to manage AI-related risks by establishing registers of use cases and incorporating AI use into firm policies (including AI-specific policies). The main risks identified relate to IT and cybersecurity, data protection and ethical issues.

The Central Bank reminds firms of the key principles and requirements for the use of AI systems, as identified by EIOPA in its Opinion on Artificial Intelligence Governance and Risk Management, as well as the requirements for the use of digital technology in the Consumer Protection Code 2025.

The Newsletter outlines standards that firms must observe when using AI:

• Appropriate strategic alignment of AI with business needs.
• Clear accountability, explainability, and human oversight for AI‑supported decisions.
• Proportionate governance and risk management, scaled to the sensitivity and impact of AI use.
• Compliance with regulatory obligations, including conduct, prudential, and operational requirements.

The Central Bank emphasises that the use of AI must strengthen fair pricing, adequate reserving and the appropriate treatment of customers.

Thematic Review of Climate Risk in Firms’ Governance

The Central Bank conducted a thematic review assessing the appropriateness of governance frameworks used by (re)insurers to manage climate change risks. The review was conducted against the backdrop of the Central Bank’s Guidance for (Re)Insurance Undertakings on Climate Change Risk (2023).

The following are some of the key feedback and examples of good practice arising from the thematic review:

• The inclusion of the sustainability agenda and climate change risks as a standing item on board and, as appropriate, committee meeting agendas was identified as good practice.
• Training of the board and senior management on climate change risks.
• Group sustainability strategies and policies, when used by the local Irish (re)insurer, should be appropriately adapted by the Irish entity to ensure that its specific climate change risk exposures are adequately captured.
• Improvement is required in defining key risk indicators for climate change risks and regular reporting to the board and, where appropriate, committees.
• Firms are expected to embed climate change risks into their governance structures, including in underwriting, investment, and business strategy.
• Roles and responsibilities for climate-related risks in firms should be clearly identified, documented and understood by the firm.
• The Central Bank expects remuneration policies to be consistent with the firm’s objectives on business and risk strategy, culture and values concerning climate change risks.

The Central Bank also emphasised the importance of good governance in supporting firms to successfully manage, respond to, and integrate climate change risks into their risk management frameworks.

Solvency II Implementation and IRRD

There have been several Solvency II updates outlined in the Newsletter, which include the following:

• The Delegated Acts were published in the Official Journal of the EU and will apply from 30 January 2027.
• There will be no phasing‑in of the interest‑rate shock in the Standard Formula solvency capital requirement.
• EIOPA has published updated guidelines on the supervisory review process (SRP) and on the treatment of market and counterparty risks in the Standard Formula. The updated SRP guidelines will apply from 30 January 2027. The market and counterparty risk guidelines will apply two months after they have been translated into all official EU languages.
• The Central Bank issued a survey to all (re)insurance firms (except captives, SPVs, groups, and third‑country branches) to support their preparation for the Solvency II reforms and to gather data for planning and risk assessment. The survey will help the Central Bank understand the number of non-captive firms that intend to apply for small and non-complex undertaking designation and proportionality measures, and how balance sheets will be impacted by the Solvency II reforms.

The results of the survey will inform whether the Central Bank establishes a pre-application assessment process for the approval of proportionality measures.

The Department of Finance is progressing the transposition of the Insurance Recovery and Resolution Directive (IRRD) with support from the Central Bank. EIOPA has issued the first set of draft technical standards and guidance on the IRRD, with further materials expected in 2026. Existing recovery planning regulations will be reviewed to ensure alignment with the new framework.

Continued engagement from the Central Bank on the implementation of the Solvency II reforms and IRRD is expected throughout 2026.

Other Insights

The following are additional insights in the Newsletter which may be of interest:

• The 2026 Solvency II Quantitative Reporting deadlines for both solo and group reporting have been published and are available on the Central Bank’s website.

• The Newsletter announces the introduction of a new sector-specific Risk Evaluation Questionnaire (REQ) for life insurers, replacing the current AML/CFT REQ. A number of sector-specific REQs have been launched, with the first submission for Life Insurers due on 11 September 2026.
• The Newsletter notes the publication of the Central Bank’s 2026 Regulatory and Supervisory Outlook Report, which reiterates its five key supervisory focus areas: treatment of customers, financial resilience, digitalisation and AI, climate change and sustainability, and operational and cyber resilience.

Firms are encouraged to review the developments and supervisory expectations outlined in the Newsletter and adopt appropriate measures, as necessary.

A copy of the Newsletter can be viewed here.

If you have any questions on the topics covered in this update, please contact a member of our Insurance and Reinsurance team or your usual William Fry contact.

Contributed by Alexandra McGuinness, Martha Ní Dhochartaigh